Chinese Imports and their Impact on the Spare Auto Parts Market in Mexico

Lourdes Álvarez and Liliana Cuadros

The situation for the auto parts subsector in China ( ...continuation )

China's economic and social development has led to an increase in the labor force price, and the loss of comparative advantages. Nevertheless, the Chinese government decided to provide incentives for auto parts exports due to their positive effect on complementary industries, and since it is a capital and technology-intensive industry. Its plans include building an export base characterized by independent innovation, order and regulation in exports, and protection of property rights. Currently, China seeks to internationalize its companies with the aim of locating them near the markets they supply, and acquiring new technologies. One of its strategies is to develop an important technological base for automotive electronics that will serve as a key element in the development and restructuring of its entire industry (Research Department of Industrial Economy, 2010). China's intention to establish an electronics standard as a barrier to entering the market and the value chain is concerning to international auto manufacturers, and consequently they have developed strategies for cooperation in research and development that will assure them a place in the value chain and entrance into markets.

Another factor that gave an impulse to the growth and exports of Chinese auto parts is the fact that multinational corporations have selected countries like China for manufacturing low-tech, labor-intensive auto parts. In order to respond to this opportunity, China planned to gradually establish a system of control over the auto parts sector and take advantage of opportunities for merging, reorganizing, expanding and upgrading its products (Research Department of Industrial Economy, 2010).

In addition, many auto parts companies around the world went bankrupt in 2009, and this created a favorable situation for China's companies to develop growth strategies, purchasing companies that would offer them access to the latest technology and markets in developed countries. For example, Beijing West Industries acquired Delphi Absorber and Break Businesses, which gave it access to the advanced technology and supply chain of Delphi, one of the world's largest auto parts-producing companies. All of this suggests that China is becoming the world's most important auto parts supplier.